Sony plans its first dollar-bond sale in nearly three decades

Synopsis

Sony is making a significant return to the US investment-grade bond market after nearly three decades, with plans for a multi-billion dollar offering. This move comes as companies rush to secure funding amidst expectations of potential interest rate hikes by the Federal Reserve. The tech giant's decision also reflects a broader trend of Japanese firms seeking dollar-denominated debt as domestic rates rise.

Sony Group Corp. was still marketing the original PlayStation when it last tapped the US investment-grade bond market. Almost three decades later, it’s readying a comeback.

The company mandated Bank of America Corp. and Morgan Stanley to hold calls with debt investors that started on Monday, according to a person with direct knowledge of the matter. A two-tranche note offering with maturities of five and 10 years is expected to follow, the person added, asking not to be identified disclosing private information.

The offering, which Sony said in a Securities and Exchange Commission filing will raise cash for general corporate purposes, is part of a rush of high-grade bond sales in the US. Companies have moved to lock in historically tight credit spreads while expectations grow that the Federal Reserve may begin to raise interest rates.

Bloomberg

Among other firms poised to tap the market this week is SpaceX, which is expected to raise at least $20 billion to repay some debt.

Sony Group last sold bonds in US dollars in 1998, when it raised $1.5 billion, according to data compiled by Bloomberg. A former US unit of the Tokyo-based firm tapped the market in 2001.

Selling dollar-denominated debt is a more-attractive option for Japanese companies now that policy tightening by the Bank of Japan has put its benchmark interest rate at the highest level since 1995. Firms have been selling record amount of euro-denominated notes amid funding-diversification efforts as rate differentials have narrowed.

Auto-parts maker Denso Corp. on Monday sold a $500 million investment-grade dollar note, after conglomerate Mitsubishi Corp. raised $1 billion earlier this month. In the eurobond market, Toyota Motor Corp. priced €1 billion ($1.14 billion) of debt on Monday.

Sony last year spun off its insurance and banking firm to focus on its entertainment business, which includes everything from games to music and films. S&P Global Ratings in March upgraded Sony to A+, four notches below AAA, citing a outlook for strong earnings and cash flows.

The company’s new bonds are expected to be rated A2 by Moody’s Ratings and A+ by S&P, the person said.

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